Risks Of A Double Dip Rising?

That’s the message all-around: The Hill “Slowing job growth raises fears of double-dip recession” (see also this), a CNN article has subheading “Double-dip recession fears”, Fortune has “TIAA CEO Roger Ferguson thinks we could be headed for a ‘double-dip recession'”, while CNBC “Virus surge is leading to a double-dip recession and dollar crash, economist Stephen Roach warns”.

We’ll have a bit more evidence one way or the other respecting the imminence of a relapse with tomorrow’s November employment release.

Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus for employment as of 11/25 (light blue square), industrial production (red),personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, IHS Markit (nee Macroeconomic Advisers) (12/1 release), NBER, Bloomberg (as of 12/3), and author’s calculations.

I’ve included Bloomberg’s consensus as of today for tomorrow’s release (assuming no revision to October numbers). As I noted a couple days ago with respect to the employment series, “The November expected growth rate keeps on getting marked down; it was 4.5% about a week ago, that itself down from about 5% from a couple of weeks ago.” It’s now 3.9% vs 4% a couple of days ago.

High frequency indicators show a distinct softening in the labor market such that one shouldn’t be too surprised if the job growth number comes in essentially at zero; from The Hill.

Homebase also reported that declines in the number of businesses open, employees working and hours worked showed an economy just as weak as it was before summer’s jobs rebound, a foreboding sign for Friday’s employment report from the Labor Department.

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